Recent studies have shown that many people will not have saved the amount of money needed for their retirement. According to one recent study on potential shortfalls in retirement income, nearly eight out of ten households will probably have less than half of what they need to retire comfortably. Many people find saving difficult, especially when it comes to knowing how much to save.
People planning for retirement often need help in answering a number of questions, such as, for example: how many years do I need to plan for, what is the best age to retire, what if I work longer, how much money will I need when I retire, what if I save more today, what if I adjust my standard of living after I retire, how much should I be saving?
Computer systems exist that can assist in some areas relating to retirement planning. In general, these computer systems are either non-interactive and do not provide alternative strategies tailored to the user's situation or are too flexible and do not provide the guidance that most users require.
For example, some software used in retirement planning allows the user to enter the appropriate information (e.g., user's age, current income, assets, retirement goal) and the software will inform the user whether or not the user's goal has been met. If the user has not met his or her goal, the program may output a general list of things the user can do to possibly reach that goal, e.g., save more now, change investments, retire later, work part-time. However, the alternative strategies presented to the user are general, not tailored to the user's situation and do not take into account the user's preferences. Usually, there is no suggestion provided as to which alternative strategy would be the one that the user would most likely find of interest. Nor do such programs provide details (such as, for example, number of years for which income is needed, average income) of any alternative retirement strategy. Thus, these programs do not make suggestions as to how factors can be varied to more closely obtain the desired retirement goal or provide details of how the user's retirement goal could be varied to obtain other desirable retirement strategies.
Typically, if the user wishes to explore an alternative strategy, the user is required to guess what would be the most desirable factor to change, re-enter the new input and have the program again perform the calculation. Such systems are not efficient, particularly where the user does not have access to a computer and the information is collected from the user and processed in a batch process.
Other software programs used in retirement planning could be regarded as totally interactive. For example, in such programs, users can enter and modify all or most parameters and assumptions to obtain the results desired. The disadvantage of such programs is that the user may not be given enough guidance in those areas where the user is likely to have no expertise, such as, for example, rate of return, inflation, earnings growth rate, number of retirement years for which income is needed, and amount of retirement income needed each year, etc. It is not advantageous to allow users to specify or change the parameters or assumptions used by the program when the user is not an expert in such areas and, further, may not be given enough guidance by the program in the best combinations of parameters or assumptions to be used in the user's particular case and for a specific retirement scenario.
Thus, there exists a need for a system used in retirement planning that identifies not only what the user should do to reach the user's specified retirement goal but, additionally, anticipates other strategies of likely interest to the user, taking into account the user's priorities, and further, provides the user with the details of the alternative strategies without the need for further user intervention. It would be beneficial for such a system used in retirement planning to determine, as part of the alternative strategies, the combinations of assumptions to be used, particularly assumptions relating to areas in which a typical user is unlikely to have special skill (such as rate of return over possibly long periods of time). It would also be desirable to select such assumptions so they are consistent with each other and are based upon personal characteristics of the particular user where appropriate.
There further exists a need for a system used in retirement planning that provides a number of alternative retirement strategies and also selects one or more retirement strategies (including the detailed components thereof) that, based on user preferences, would most likely be of interest to a user.
It would be desirable if such a system enabled the user to provide input on only one occasion (for example, so that the system could be efficiently operated on a batch basis for those who do not have access to a computer). Most desirably, such a system should anticipate certain user questions and provide details of alternative strategies likely to be of interest to the user without the need for additional user intervention.
There further exists a need for a system used in retirement planning that provides information to the user in a written and graphical format that is easy to comprehend. Where alternative strategies are presented, it would be desirable if each strategy is presented so as to be easily compared with the other strategies.